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8 Surprising Business Uses for Blockchain Technology

Thinking outside the currency box

Pardon the cliché, but blockchain
technology could just be the greatest thing since sliced bread for businesses.

For those of you unaware, blockchain is the digital,
distributed, and decentralized ledger that often, but not always, underlies
cryptocurrencies and is responsible for recording all transactions without the
need for a financial intermediary. That long definition basically means it’s a
new way of sending peer-to-peer or business-to-business payments without the
need for a bank.

The evolution of blockchain, which was first pushed into the
spotlight in 2009 when bitcoin debuted, is the result of perceived flaws with
the existing banking system. Namely, excessive fees from banks acting as third
parties during transactions, and lengthy processing times, especially in situations
where a payment is moving across borders.

Blockchain aims to resolve these flaws for the financial
services industry in three key ways. First, blockchain networks are
decentralized, which means there’s no central area where transaction
information is stored. This prevents any business, person, or hacker, from
gaining control of a network. Secondly, it eliminate banks as the intermediary,
which could lower transaction fees. Finally, it aims to dramatically speed
up processing and settlement times. Rather than waiting up to five days for
an overseas payment to validate and settle, blockchain offers the possibility
of completing transactions almost instantly.

But for all the notoriety blockchain receives as a solution
for the financial services industry, it overlooks its potential in non-currency
applications. Here are eight surprising business uses for blockchain technology
that you probably weren’t aware of.

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1. Supply chain management

Arguably the most exciting aspect of blockchain is what it
could do with regard to improving transparency and efficiency for enterprise
supply chains. From product origin to retail shelves, blockchain provides a
transparent and immutable (i.e., unchanging) history that manufacturers,
wholesalers, retailers, and perhaps even the consumer, could look back on. This
transparent network gives retailers, wholesalers, and manufacturers the
opportunity to quickly and precisely pinpoint inefficiencies, which would be a
major improvement over the current paper-laden trail for most supply chains
today.

For example, in January, IBM (NYSE: IBM) and Danish shipping company A.P. Moller-Maersk
(known more commonly as Maersk) announced they’d be forming
a separate joint venture company focused on developing blockchain solutions
for the shipping industry. This move by IBM and Maersk will allow customers a
real-time look at their supply chains while, more importantly, removing paper
from the equation. By automating paper filings through the use of smart
contracts -- protocols that facilitate, verify, or enforce the negotiation of a
contract -- document approval should be quicker, removing the inefficiencies of
long paper trails.

2. Retail loyalty points

Make no mistake about it, the retail industry could benefit
in a big way from a more transparent supply chain. However, blockchain can be
just as important in helping drive traffic back into its stores. That’s because
blockchain is the perfect disruptive technology to make
loyalty rewards programs more effective.

Loyalty programs today are highly inefficient. They often
rely on coupons, punch cards, or other paper materials, making it easy for
fraud or inefficiency to occur. Blockchain technology could change this. It
could allow retailers to create or use a digital currency that would be awarded
with customer purchases. This currency would only be spendable at locations
specified by the retailer, thusly keeping the consumer shopping within its
preferred network of stores. Best of all, since blockchain is transparent and
immutable, there’s virtually no chance of fraud or waste. IBM is already
working on loyalty rewards solutions with startup Loyyal, and this is probably
just the tip of the
iceberg.

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3. Value-based healthcare

Blockchain solutions could also come in particularly handy
in the healthcare sector, which has been steadily moving away from paper and
toward digital applications for years. In its simplest form, blockchain could store
patient records, with the patient possessing the key to determine who gets
access to this information. It would be a really nice way of beefing up HIPAA
laws protecting patient privacy.

But one of the most intriguing projects underway in the
healthcare space with blockchain involves the idea of patients paying for the
value of care received rather than the medical processes themselves. The
decentralized Robomed Network in Russia and Dubai uses smart contracts to allow
patients to pay for the results of their treatments rather than the number of
treatments received. It’s an idea that’s gained growing support, despite its
complexity, in the United States. As of last year, the Robomed Network had
almost 9,000 patients and 30,500 services performed.

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4. Energy trading, resource logging, and compliance

The energy sector could also be a prime beneficiary of the
blockchain revolution. In particular, blockchain ledgers are the perfect means
for executing and recording energy trades, along with resource samples, in a
transparent and immutable platform. Energy trades can, with blockchain, settle
considerably faster than with traditional trading networks. Meanwhile,
blockchain has allowed mining giants like BHP
Billiton (NYSE: BHP) to record resource samples on a single ledger,
replacing paper and spreadsheets in the process.

Additionally, the transparency of blockchain, and the
ability to remove paper from the equation, provides a means of demonstrating
compliance to regulators. Instead of inefficient analysis of paper
spreadsheets, vast amounts of data can now more easily be analyzed for
compliance.

Not to mention, the addition of smart contracts should
improve supply chains and help reduce contract disputes since digital contracts
are viewed as more
legally binding.

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5. Internet-of-Things network management

Another exciting application of blockchain involves its
tie-in with the Internet-of-Things (IoT). The IoT describes devices that are
connected to a wireless network and capable of communicating with users, as
well as with other devices. Smart thermostats, such as Nest, learn the heating
and cooling habits of homeowners to more efficiently regulate the temperature
of households, as well as save on electric bills. Similarly, a smart fridge
could alert users about food spoilage, sending them reminders when items have
been in the fridge for a long period of time. These are just two of countless
examples of IoT in the household; but understand that IoT extends beyond just
the confines of your home.

Blockchain could come into play as a regulator of IoT
networks. For example, in October 2017, Cisco
Systems (Nasdaq: CSCO) filed for the trademark of a blockchain platform
that would oversee
IoT networks. Cisco’s blockchain would identify devices connected to a
wireless network, monitor the activity of those devices, and determine how
trustworthy those devices are. However, it wouldn’t do this just for devices
connected to the network at the beginning. It would continually and
automatically assess the trustworthiness of new devices being added to the
network, such as cars and smartphones.

6. Decentralized IDs

Developers are also tinkering with the idea of using
decentralized blockchain-based IDs to make operating a business and traveling
easier, as well as to improve identity security. As an example, a
blockchain-based ID would let travelers control transportation agents’ access
to their information with a private key. This data would include places a
person has traveled to, and it may or may not include personal data stored on
the blockchain. It could potentially expedite security checks through an
airport, and possibly free up resources at an airport for other uses.

One of the more intriguing blockchain ID projects is being
headed by Microsoft (Nasdaq: MSFT),
which announced its intention to put users in control of their digital
identities in a recent blog
post. Microsoft plans to develop a decentralized ID within its already
existing Authenticator app used by millions of people. What’s particularly
unique about this project, which is admittedly still in its very early stages,
is that it would allow developers to customize
apps and services that rely on attestations, thusly reducing the amount of
personal information that needs to be processed when using apps.

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7. Data-sharing marketplace

While we’ve looked at a number of company-developed
blockchain projects, there are cryptocurrency-backed solutions that are just
as interesting. A perfect example is being developed by IOTA, which is
currently the 10th-largest cryptocurrency by market cap.

IOTA recently debuted a beta version of its Data
Marketplace, which is designed to allow companies to sell or share unused data
with one another. It’s the IOTA Foundation’s opinion that most corporate data
goes unused, so this marketplace would allow businesses to collaborate or
inspire innovation within their industry. It’s particularly noteworthy that
IOTA’s blockchain is described as “blockless,” meaning it’s an open-source
network that’s completely free for users. With no transaction fee, IOTA has
removed perhaps the greatest objection to using blockchain.

The IOTA Foundation notes that nearly 40 brand-name
companies are participating in this testing and offering feedback in the process,
albeit it has no official partners as of yet.

8. Copyright and royalty transparency

Finally, blockchain technology offers the ability to
completely revolutionize how copyright laws and royalties are adhered to.
Perhaps no industry is a better test case than the music industry, where
ownership rights can be overlooked, especially when it comes to digital music
downloads. The transparency of blockchain, along with smart contracts, would
create a decentralized database that ensures artists maintain their music
rights. It would also provide transparent and real-time royalty distributions
to musicians.

Qtum, another budding cryptocurrency with a $2 billion
market cap and a focus on partnering with major Chinese businesses, announced
in January that it had formed
a strategic collaboration with Baofeng Bokocloud. This may not be a
familiar name in the U.S., but Baofeng’s media player in China, which offers
streaming and video services, has more than 200 million active users. Baofeng
plans to use Qtum’s blockchain as a means to shore up the copyright protections
of artists, as well as to accept payments from users.

These eight business uses for blockchain are simply the tip
of the iceberg. In the years to come, expect the experimentation in non-currency
uses to really pick up.

Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool’s board of directors. LinkedIn is owned by Microsoft. Sean Williams has no position in any of the stocks mentioned. The Motley Fool is short shares of IBM. The Motley Fool recommends Cisco Systems. The Motley Fool has a disclosure policy.